I don't think I know enough about the CRA to have an educated opinion on this. To my understanding the idea was to stop discrimination against lower-income people or those living in lower-income neighborhoods who otherwise had the ability to pay off the loan they were asking for. That's fine by me. AFAIK it was NOT meant to make loans to people who clearly were unable to pay them off. That started happening much more recently as the housing bubble went out of control and everyone wanted to join the ride.

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Iv'e been through a few of these downturns and there is always money to be made during them.

When the Dollar drops the goods we sell abroad increase. Big ticket items are the first to see increased demand.

Overseas invelstors don't hold Dollars or US Bonds to make lots of money, they hold them to make sure they still have lots of money.

Confused? Well, I know where you can get a 600% annual return on your money if it is still there at the end of a year. Most inveltors consider the risk of this type of third-world investment to be too great. They know that the US will be here when they need their money and that is worth a lot.

Want to get really rich? When the Dollar is at its' low point buy all you can. When the Dollar recovers; sell.

One last thing: Inflation is self canceling. It would take too long to cover this here, but in five years you will know what I mean.

Pooka

That's assuming this downturn is just like any other recent one. I'm afraid most would disagree with you.

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Yes, it was not meant to be this that or the other. Fine. I never said Clinton had bad intentions. Here is the problem. The road to hell is paved with good intentions. Now, what if the CRA was abolished, Fannie and Freddie were not forced to get involved, would we have to bail them out today? Would we be in as serious a mess as we are? I think not.

It does however, seem to add weight to my philosophy that when govt gets involved, sooner or later, we have another mess on our hands.

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Remember we bailed out many more than just Fannie & Freddie. The housing boom & bust would have probably happened sooner or later anyway.

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Yes we did. A couple of things though. We don't have that much money so if we could have saved on Fannie and Freddie, it might have been good. Later works better for me, I don't know about you. In any case, if F&F hadn't gone around guaranteeing bad loans, maybe, just maybe, we might not have so many other people going wild making those bad loans and maybe, just maybe, the boom won't be as good and the bust won't be as bad.

If you are going to guarantee any loan I have, why won't I take advantage of the guarantee and make as much as I can today? If it goes south, it's YOUR problem. You guaranteed it. If it makes money, good for me. Private Profit, Public Risk. If you will guarantee my losses at the casino, I'll take my life savings there. I win, I'm rich. I lose, you pay.

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F&F owns "only" about 50% of all mortgages. From what I know the main problem was the credit rating agencies like Standard & Poor giving A+ grades to risky mortgage securities because it was good for their business. Kind of like with the Iraq war in the beginning, it was generally not tolerated to speak up against it within the companies that were involved. PBS recently aired an interview with a S&P whistleblower on this. It was quite interesting.

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That is a big chunk for an "only".

Not sure about that. I don't think I saw that PBS show. Got a link to that? Could it be that S&P thought that it was A+ because it had some sort of backing and they could sell that idea and give it an A+? I would think it would hurt the company if they simply rated everything A+ without some way of justifying it. May be a half assed justification but what was their justification as to their rating? I would think that a company that simply says everything is A+ would lose all credibility when it comes to rating.

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To my understanding, it was the use or misuse of those credit default swaps that allowed them to take C-rated securities and turn them into A+ through some fancy equations. They certainly didn't rate everything A+ and in fact their ratings were widely respected because they had a good history of being accurate, until recently that is. I don't have a link to the show, but it was the weekly show called NOW that airs on Friday nights. If you go to the PBS website you might be able to find it in the archives.

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The Clinton administration is the cause for the lax policies regarding loans. That is a primary cause of housing collapse.

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That's what I am saying. They were highly respected because most of their ratings were pretty much right on. Now, unless you think they are using a different equation for certain securities like these, which is a whole different story then what is it that made these C-rated securities A+ ratable? Could it be that the govt guarantee of it, in view of the govt strength was a factor in changing the C-rated securities to A+ rated? IOW, "Oh, it's backed by the US govt so it must be A+ since the govt is strong."?

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To an extent, yes. But Bush also did nothing to remedy the situation and he had plenty of time to do that.

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Govt backing most likely played a role in at least some of the improved ratings, but in general it was the backing of someone else, be it the govt or some firm on Wall Street that had backing from someone else and so on, via those credit default swaps.

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And if his admin had done something to "remedy" it, how much better would we be today? Maybe it is for the best that nothing was done to "remedy" it. Each time they get involved, whomever or whatever side, we seem to have more problems. Maybe not today but somehow, later.

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I think that's a pretty silly thing to say. I know you don't like govt meddling, but do you really dislike it so much that you don't even want the govt to try to undo any previous meddling? This crisis was caused by a blend of some bad regulation (the lax lending standards) followed by a lack of regulation of the securities trading. That, and the very low interest rates set by the Fed. You can't just throw all regulation in the same bag, as if it's all equally bad or equally good. That's called seeing the world in black and white, and I assure you the world isn't like that.

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